Where to Begin?

A Model for
CPA Firms Seeking
Alignment with the Vision
for the CPA Profession in 2011

Prepared as a Non-Authoritative Guide
by the CPA Vision Team
Version: 2.0

Characteristics a Public Practice Firm
Moving Toward Vision Alignment

Additional Characteristics

The firm has a clear picture of where it is going and why. Generally visionary in their outlook and working style. Focused on identification of clients needs, opportunities and new service and market development. All members of the firm can articulate the goals and understand the direction of the firm's development activities and how they fit into the process. The firm has networks that allow it to serve the client base through virtual alliances and non-traditional employment agreements.

The value streams, culture, structures, people and systems are all aligned to produce efficiencies and profitability, and deliver on a well-considered market position for the firm and its clients.

Critical Insights and Questions for Public Accounting Firms
Moving Toward Vision Alignment

There are a variety of issues that must be considered in order to bring the firm into effective alignment with the vision for the profession's future. Here are a few that need to be considered. The list is not comprehensive, but will give any firm some starting points to consider. Recognize that the firm will need to make an investment in "down time" to consider these issues. Initial efforts may be uncomfortable, but with practice will lead to geometric improvements in firm efficiencies and therefore profitability and, in the long term, firm viability.

Value Streams (What CPAs Deliver):

1. How can the firm expand into new markets or new services and products²?
   

   	Does the firm personnel have the appropriate marketing support, tools and training to deliver in these new markets or services?
   	Does the reward system enable and empower employees to seek out early and big wins in new services or markets?
   	Are there strategic alliances that can fill in gaps between existing firm skills and capabilities and the new markets and services?

   
    
2. Chart the firm's product and service mix against the economic platforms and decide how and who will move into the next level of service from their existing level of service delivery³ . (See sample attached). Create a client profile of the firm's client base (most profitable to least profitable). For the top 20% of your client base, can you do the following?

   Identify at least three new services or products the firm could offer and assign those to a firm member for development in the next six months.

   
    
3. 3. For the top 10% of your client base, can you do the following? If you can, how often do you discuss these with your client? If you can't, discover the answers and start using the information to discuss expanded services to meet the client's needs.

   Identify the critical characteristics and issues of the client's market. For example:

   Top issues facing their market Most critical bench-marking data and statistics Most pressing problem (from their perspective) Current critical business operating ratios Name their five largest clients Identify two potential expansion areas for their business Who they may be most vulnerable to for merger or take-over and or who they might create effective strategic alliances or business partnerships with to enhance their profitability. (When was the last time the primary client contact spent time with the client listening to these issues and their concerns?)

   
    
4. For the least profitable (10 or 20%), determine a strategy to either "fire" the client, move them to a more profitable service level, or increase fees to the point that you can afford to do the work. With the additional freed resource, refocus on your most profitable clients, identified above.
    
5. What is the language game currently being used with clients? For example, do you talk about "things" rather than strategy and direction, current and historical problems or future goals? How can you shift the language and topic to more strategic directions, which will encourage new market and service discussions?
    
6. What investment in technology will create a more effective and valuable database of information on clients? What investment in technology will free more of my time for higher level billable work?
    
7. What products and services could be bundled into a new "service category" that can be automated? For example: business tax preparation and write-up might be bundled into an "entrepreneurial package" that would include an annual "fiscal check-up", quarterly graphical review of critical business operational ratios, etc. Once the "add-ons" are identified and developed, they can be delivered in a "customized" format for little additional cost (taking certain fields of information from financial statement preparation, exporting them into spreadsheet applications and producing graphs, etc.).
    
8. Can the firm articulate the services that will bring the firm most closely into alignment with the market needs of the future? Use the Prioritization Framework Grid (see attached), to develop a plan to systematically realign the firm's products and services toward the highest future market need and business imperative.
    
9. Does the firm operate with a "client needs identification/marketing" mind-set or an "order taking/selling" mind set?
    
10. Does staff take delivery of products/services (such as financial statements and tax returns) as an opportunity to meet with clients or do they drop these products in the mail?
     
11. What differentiates you from a technology based provider of the same service? Would your client be able to articulate the difference?
     
12. If you dropped dead today, how long would be take for your clients to notice?
     
13. Remind yourself of what you LOVE doing with or for clients and do more of it with real passion. Figure out how to eliminate or minimize things you don't like to do. Creativity comes more naturally when you do what you LOVE to do. Don't be afraid to bill for value and quality. Show your capability and breadth of knowledge and understanding.
     
14. Quit selling a standard "one size fits all" product! Determine how to market the products and services that your firm does best and that fit the client's needs. This is a distinctly different process and it will get you out of the commodity business and mind-set.

Firm Culture (The Way CPAs Behave and Respond):

1. Does the firm have a clear vision of what it is, where it is going and how to get there? Could anyone besides the partners describe the plan or the vision?
    
2. Does the firm culture reward or penalize creativity and out-of-the-box thinking? Is there a budget for "research and development" of new markets and products or services? Once identified, is there reward or encouragement for the development and sharing of tools and techniques for marketing new services and products?

   Acid test: Ask the staff how they perceive the "cultural support" for these new activities. Identify the problems they perceive and then determine how to eliminate the roadblocks.

   
    
3. Does the culture encourage or discourage cross-selling of products and services for clients between staff and personnel?
    
4. Does the culture encourage the concept of doing what you love and have passion for, or does it reward compliance with current firm image and product/service mix?
    
5. Does it capitalize on the talents and skills of the differences in staff strengths or are staff members expected to perform and work "alike"?
    
6. Is there sufficient cultural support for non-traditional networking, such as encouragement of potential strategic alliances, new market or industry specialization and understanding? These would traditionally fall into a "research and development" budget, if done in a non-accounting environment.
    
7. What does the firm culture say to "outsiders" about the nature and potential of the firm and its ability to make things happen, be a solution provider, as an example?
    
8. Is the culture of firm vision and direction open enough that the staff could articulate the position of the firm on such issues as "non-CPA ownership", commission or contingent fee work and it's impact on other firm products, services and client relationships?
    
9. Does the culture nurture and support a clear set of values held by the profession and the firm? How are these values reinforced and transmitted to new staff? Can the staff articulate the value set of the firm?
    

Structure (How CPAs are Organized)

1. Does the firm structure (from receptionist to partner) allow appropriate rewards for contribution to overall firm profitability?
    
2. Does the firm structure allow it to maximize strengths of individuals rather than reshaping the individual to the structure?
    
3. Does the structure encourage and support individual empowerment and cooperative team work to service clients?
    
4. Does the structure encourage and support good, smooth, and regular communication internally and externally with and about clients and work-in-process?
    
5. Does the structure allow meaningful delegation of reasonable authority to those charged with delivery of the work product or service?
    
6. Does the structure encourage or discourage communication, dialogue, insight and sharing with all members of the firm?
    
7. Are structure and education and training appropriately aligned to support and deliver non-technical skills necessary for the level of responsibility assigned? For example, are staff currently trained in the best communications, leadership, marketing and human relationship skills to accomplish the expectations of their position?
    
8. Would the structure allow for systemic, virtual systems and employment for product and service delivery?
    
9. Does the structure allow meaningful contributions from all levels to flow and be acted upon?
    
10. Is the structure designed to encourage measurement of performance against long-term vision and strategy goals of the firm, or is it focused on billable hours and immediate results?
     
11. If the firm were a corporation and not a partnership, how would the reward, work-in-process, client management and contact, market development, research and development, and technical resources be handled and developed? How would compensation and human resource matters be measured and handled? Identify the roadblocks and find solutions that produce results supportive of the best interests of the firm.
     

People (Having the Right People in the Right Place at the Right Time)

1. How will the firm retrain existing staff to deliver the competencies and services that the marketplace is demanding? Is there a plan to examine the existing balance, and then determine training needs for the firm as a whole?
    
2. Where can the firm expand its recruiting efforts to find non-traditionally trained professionals that can create a value-add for the firm's client base?
    
3. Are there opportunities for non-traditional employment arrangements that may fill needs within the firm (virtual employees, strategic alliances, networking groups)?
    
4. What can the firm do to begin to demonstrate both internally and externally, the capabilities and unique talents of individual firm members? Are there opportunities for cross-training from within the firm?
    
5. How can the firm train staff and set appropriate guidelines to deal with risk management and risk tolerance to meet the realities of today's business environment
    
6. What can the firm do to encourage leadership, individual empowerment, and decision making among its staff? How can you showcase these strengths to clients, and internally to other staff members?
    
7. What message and action can the firm take that encourages staff focus to "value-add", solution and out-come orientation rather than the "it isn't my job" or "I'm too busy" perspectives
    
8. What opportunities and education can staff undertake that will encourage strategic thinking and strategic client orientation rather than a procedural focus and orientation?
    
9. What does the firm do to encourage quality of life in the staff? What examples do the partners set? What is the best activity to increase morale and instill a sense of passion and fun into daily working environments?
    

Systems (How CPAs Perform Work)
 
Reward Systems

1. Do reward systems empower and reward in proportion to the contribution? Do they recognize complexity and value-add? Do the systems encourage value billing and client retention of the best and most profitable clients?
    
2. Does the billing and collection system encourage work-in-process payments and/or retainer engagements for "least effort" collection for the firm's invested resource?
    
3. Does the billing and collection system emphasize and "show-case" value-add to the client?
    
4. Will the billing and collection system handle non-traditional engagements such as commission or contingent fees?
    
5. Does the time and collection system encourage focus on value or production? What message does the billing system send to clients and employees?
    
6. Does the billing system connect the client to any value beyond compliance?
    

1. Does the technology system support paperless efficiency, transportability, cross-application data interface, electronic communication and commerce, and good in-firm communication and collaboration?
    
2. Is new technology introduced regularly with appropriate training to maximize use?
    
3. Does the staff feel comfortable with "technology language" that clients may use?
    
4. Does technology encourage and support virtual work? For example: cell phones, voice mail, e-mail, dial-up networking, intra-nets, extra-nets, laptops, virtual assistants.
    
5. Is technology preventing me from competing in the marketplace? What do I need to do to overcome this?
    
6. Do all staff have effective and real-time access to the Web and e-mail?
    

1. What does the office space/location, furnishings, and technology interface (e-mail, web page, voice mail, virtual assistant) say about the firm and it's capabilities and working style?
    
2. What does your letterhead, business cards and client newsletter say about the firm's image, techno-savvy, business savvy, and business posture? Are all the options for communicating with the firm clearly identified (e-mail addresses, web page, cell phone numbers, etc.)?
    
3. Does the firm's communication system position the firm to "sell" or "market" your services and firm?
    
4. What can or should you be saying about your capabilities that your clients and prospects don't know, or would be surprised to know about you or your firm?
    
5. If you have a firm niche, how are you working and promoting the niche? Do you have a communication system that could provide a specialized newsletter? Does the communication system encourage marketing techniques such as an annual briefing on economic trends in the niche area, or even the economic environment of the state, region or country?
    
6. How are the firm's internal communications encouraged, empowered, and supported?
    
7. What is the language of staff meetings? Does it center on details and problems or does it focus on strategies, solutions, networking opportunities and contributions?
    

1. Are reward, salary and benefits systems competitive for the marketplace environment and commensurate with the expectations for skills and productivity?
    
2. Are appropriate training and education systems in place to ensure that staff have the requisite skills to meet market demands and partner expectations? Is there an overall review of the skill inventory of firm personnel to determine need for expanded skills and to avoid duplication of training at an inappropriate level?
    
3. Is there a mentoring program available or functional that is producing good results for both the staff and the firm?
    
4. Are employees empowered with appropriate tools, training and authority to deliver on the expectations being made of them?
    

1. Is there a system or process to encourage introduction of new products or services in a way that ensures reasonable success? For example: checklists to determine best options for expanding products/services; trial of a new product/service, feedback loop and team evaluation to see why the introduction might have succeeded or failed, training and roll-out with additional staff to identify cross-selling opportunities and characteristics.
    
2. Is there a system to eliminate or phase-out less profitable products and services, or automate them to lead to more profitable, higher value services?
    
3. Is there a system that encourages regular review of product/service lines to determine where to focus firm resources for highest profit and best use of firm resources?
    
4. Is there a system that staff can employ to more effectively manage workload and collections?
   1. Do you have an audit work schedule to keep clients on schedule with their portion of work-in-process? Are their penalties for client failure to perform and rewards for cooperation and timeliness?
       
   2. Do you have a staggered fee schedule for tax clients to reward those who come prepared and stay with scheduled appointments?
       
   3. If the client were a new employee how would you "train" them to know how to work successfully together. Have you given the client a reason to help you help them?
       
   4. Do you have a work-in-process payment plan to avoid full investment for client's who may not be able to pay for products or services? For example: 50% of anticipated tax preparation fee when papers are brought in, the balance when the returns are delivered. Same type of process for audit work. Consider building in discounts for performance to provide incentive to remain timely and to make payments in line with work performed.
       
   5. Do the work be "bundled" into retainer arrangements where payments are part of the client's regular payable process?
   
    
5. Is the information technology system automated and integrated to create value and provide significant insight into client needs and cross-selling opportunities?
    
6. Is the firm's record retention system automated and electronic to allow easy and less costly retrieval and identification of clients with common problems or follow-up needs?
    

1. What are the bottlenecks and roadblocks in the systems from top to bottom that take more time and resource than they add value to the overall equation? Look carefully at time and billing procedures and measure cost versus "value-add" to the process. Take into account what the time and billing process is doing to shape employee focus.
    
2. Are systems aligned with one another so that there is a cohesive result, or are systems "borrowed" and "patched" from other firms or previous employers?
    

The Accounting Profession — Economic Platforms£ Example Return

LEVELS OF WORK	DESCRIPTION	TAX	AUDIT & ACCOUNTING/ CONSULTING	TECHNOLOGY CONSULTING
VII	Universals — Determinant
VI	Multiples — Interpretative	VISIONING — GLOBAL MARKETS STRATEGIES AND TRENDS
V	Source of — Conceptualize	STRATEGIC AND DIRECTIONAL MARKET-WIDE CONCEPTS & PLANNING
IV	Orchestrate — Parallel Processing	KNOWLEDGE MANAGEMENT
		Holistic Integrated Business Planning and/or Personal Estate Planning Strategies	Business Process Consulting; Strategic and Future-Based Planning	Systems Integration
III	Systems — Alternative Pathways	Tax Planning Strategies for Business and Individuals; Structure and Posture.	Base Audit Control Assessment; Business Systems Process Consulting	Systems Design
II	Diagnostic — Linear	Tax Forms with Schedules for Tax Minimization; Client Representation before Taxing Entities.	Review & Financial Statement Preparation	Systems Diagnostics
I	See-Do — Motor Visual	Basic Tax Form Preparation	Bookkeeping & Write-Up & Compilation	Systems Installation

This variation of the Virtual Consulting Inc.'s Economic Platforms model shows how work is performed by the level of difficulty of the task. The higher the level of work, the more sophistication, decision-making and strategic thinking is required.   The future of the profession rests in services from levels IV and above. Products and services in levels I-III become part of the commodity world and are ruled by "faster, better and cheaper". If CPAs provide services at levels I-III, they must be prepared to compete with automation, technology and other

providers of services who are seeking to deliver in the "faster, better and cheaper" selling mode.   See Page 22, CPA Vision Project Final Report, 2011 and Beyond, "Moving Up the Economic Value Chain" for more information.

V i s i o n	10	B Higher Vision Direction Lower Priority Business Requirement					A Critical Priority Vision Direction and Business Requirement
	9
	8
	7
	6
	5	D Lowest, Least Effective Vision Direction and Business Requirement					C Lowest, Least Effective Vision Direction Higher Priority Business Requirement
	4
	3
	2
	1
		1	2	3	4	5	6	7	8	9	10
		Current Professional and Business Requirement

1=Lowest Priority & Effectiveness     5=Moderate Priority & Effectiveness     10=Top Priority & Effectiveness

1. On a separate piece of paper, list products and services currently offered by the firm.
    
2. Rank those products and services by two characteristics on a scale of 1-10, 10 being highest:
   • The score by which it moves the firm toward the vision, strategy and goals, and;
   • The score by which it meets the firm's current professional and business requirements
   
    
3. Plot the "score" for each product and/or service on the Prioritization Framework Grid.
    
4. Those products and services falling into grid D should be candidates for elimination; those products and services falling into grid A become top priority, moving the firm closest to the vision and closest to the professional and business requirement.
    
5. Review products and services falling in grids B and C and determine what could be done to move them into a grid A position, or move them into grid D and eliminate them or transition them out.
    

Other Considerations:

1. Budgetary impacts; amount of resource needed; opportunities for combination with other higher level activities; if the decision is made to discontinue, should it take effect immediately or be phased out.
    
2. Resources should be realigned to provide maximum amount of support to activities in the A quadrant and least amount of resources to the D quadrant until the products and services in D can be eliminated, moved up to higher quadrants, or phased out.
    

¹See Harvard Business Review, "What makes a Leader?", November-December 1998, page 93, and Wired, "Zen and the Art of Org Charts", December 1998, page 209. Return

²See page 25 of the CPA Vision Project Final Report. Return

³See page 23 of the CPA Vision Project Final Report. Return

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